Winning Bizness Desk

Mumbai. New financial year 2022-23 has begun and many folks think of investing in the later part of the year many times, ending up becoming a financial fool. Personal finance experts are of the view that an alert individual should not wait until the end of the year and start financial planning from April itself. Starting early can not only save you tax, but also help you achieve your financial goals.

Say no to avoid Risk

Often people avoid investing money in market related options to do away with risk. Even though options like Equity Linked Savings Scheme (ELSS) offer higher returns than PPF, tax saving FD or other post office savings schemes, old-fashioned investors stay away from it. Apart from the tax benefits available on ELSS under Section 80C of the Income Tax Act, these options offer higher than inflation rate returns over a long period of time.

Say no to last minute rush

Another big mistake made by tax payers is to always look for investment options at the end of the year to save tax. In the midst of this hustle and bustle of tax planning at the last moment, some wrong decisions can be made, which will make you more likely to choose investment options that give low returns. Last minute rush may either miss you on time submission of proof of your investment or delay in approval of payment, increasing the chances of the tax payer not actually getting the tax saving benefits .

Save tax and Get full return

By investing money together in the last quarter of the financial year, you can save tax, but you do not Last minute rush. Therefore, it is advisable to do tax saving planning at the beginning of the financial year itself. This will give you the double benefit of saving tax as well as getting returns throughout the year. Suppose you want to invest 1 lakh rupees in ELSS to get tax exemption, but you make this investment in the last month of the financial year i.e. March, then you will save tax on 1 lakh rupees by investing in it, but in this scheme You will not be able to get the return of 70 to 80% which has been given.

Insurance and investment are different

Taxpayers often make the mistake of lumping insurance and investment together. Such people want to invest in endowments, money back policies or ULIPs. Such products neither give you adequate insurance cover, nor do you get better returns. In addition, they also have a lock-in period of 5 years. At the same time, products like pension plans are locked-in till your retirement age. Hence, it is better to keep insurance and investment separate while planning for tax savings.

Investment should not be only for tax saving

As a general rule, you should compare the returns, liquidity and risk of other investment options including ELSS, PPF or NPS rather than just looking at their tax benefits. By doing this you will be able to get better returns along with saving tax. This will also help in timely completion of long-term goals. Such as raising money for retirement and depositing money for children's education. Before investing, you need to understand that the main objective of investing should not be to save tax, but to earn good returns.